Marketing strategies lead to more new clients and assets: Firms that document both their ideal client persona and client value proposition as part of an overall marketing strategy attract more new clients and assets from new clients compared with those who do not.

Competition for talent heats up: Nearly three quarters (73%) of firms are planning to hire in the next 12 months, and 41 percent recruited from other RIA firms in 2017.

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"Independent advisors have certainly enjoyed buoyant investment returns but have also grown their businesses organically and strategically, which positions them well for sustainable growth even in the face of market volatility"

SAN FRANCISCO--(BUSINESS WIRE)--The independent advisory industry remains on a growth trajectory,
according to results from the 2018 RIA Benchmarking Study from Charles
Schwab, the largest study of its kind in the industry. The data from
Schwab’s latest Study indicates AUM grew 16.2 percent in 2017 at the
median versus 9.6 percent in 2016, and the five-year compound annual
growth rate (CAGR) for AUM was 10.9 percent, from $358 million in 2013
to $652 million in 2017. Meanwhile, revenue accelerated from $2.2
million in 2013 to $3.6 million in 2017, a five-year CAGR of 9.8 percent.

“Independent advisors have certainly enjoyed buoyant investment returns
but have also grown their businesses organically and strategically,
which positions them well for sustainable growth even in the face of
market volatility,” said Jonathan Beatty, senior vice president, sales
and relationship management, Schwab Advisor Services. “Firms are fueling
their organic growth by differentiating and marketing their value
propositions, improving the client experience, and strategically
expanding their service offerings to meet the needs of their ideal
clients.”

Standardized operating margins ranged from 22.9 to 29.2 percent
in 2017 among the peer groups.

Operating discipline provides increased capability and
scalability, enabling advisors to spend more time with clients.

AUM

Clients perprofessional(median)

AUM perprofessional(median)

Over $2.5 billion

45

$163 M

$500M - $750M

53

$99 M

$100M - $250M

55

$55 M

Your reputation is your brand

In 2017, 46 percent of firms created a documented marketing plan
and 49 percent had a marketing budget.

Approximately one in three firms document their referral goals
from existing clients and from business partners, or centers of
influence.

In addition to referrals, which are foundational to organic
growth, firms leveraged a range of digital marketing channels to
help their firms grow: email newsletters (62%), social media
(58%), and video (22%).

The median firm increased its client base by 4.8 percent in
2017, compared with 3.6% in 2016.

People are your most important asset

Nearly three quarters (73%) of firms are planning to hire in the
next 12 months, and 41 percent recruited from other RIA firms in
2017.

The largest firms are hiring most aggressively: 69 percent of
firms with over $2.5 billion in assets plan to hire relationship
managers in 2018, while 84 percent plan to add support staff.

Attributes of the fastest-growing firms

For more than a decade, the Benchmarking Study has examined attributes
of the fastest-growing firms: those firms that are the top 20 percent of
firms with $250 million or more in AUM based on a five-year net organic
CAGR.

The fastest-growing firms in the 2018 Study exhibited several key
attributes3:

Five-year net organic growth CAGR is almost four times that of all
other firms: 15.4 percent compared with 3.9 percent at the median for
all other firms.

Fastest-growing firms won close to double the number of new clients in
2017: 36 at the median versus 19 for all other firms.

These firms also saw twice the assets from new clients compared with
all other firms: $48 million versus $24 million at the median.

For fastest-growing firms, more new client assets come from a
combination of business partner referrals and other marketing (60%)
versus existing client referrals (40%).

“The most successful firms are focusing their ability to appeal to and
meet the needs of their ideal clients,” said Beatty, “and they deliver
their message to clients and prospects through strategic communication
channels. With the success of this industry comes more competition, and
the firms who thrive are those who effectively amplify their brands,
invest in their people, focus on best practices and deploy the right
technology to drive operational excellence and an optimal client
experience.”

About Schwab’s RIA Benchmarking Study

Schwab designed the RIA Benchmarking Study to capture insights in the
RIA industry based on study responses from individual firms. The 2018
study provides information on such topics as asset and revenue growth,
sources of new clients, products and pricing, staffing, compensation,
marketing, technology, and financial performance. Fielded from January
to March 2018, the study contains self-reported data from 1,261 firms
that custody their assets with Schwab Advisor Services and represent
slightly over a trillion dollars in AUM, making this the leading study
in the RIA industry. This self-reported information was not
independently verified.

Since the inception of the study in 2006, more than 3,400 firms have
participated, with many repeat participants. Participant firms represent
various sizes and business models. They are categorized into 12 peer
groups—seven wealth manager groups and five money manager groups—by AUM
size. Unless otherwise noted, study results are for all firms with $250
million or more in AUM, representing the vast majority of total assets
managed by this year’s participants.

The fastest-growing firms are the top 20 percent of firms with $250
million or more in AUM as determined by net organic growth (five-year
net organic compound annual growth rate). Net organic growth is the
change in assets from existing clients, new clients, and assets lost to
client attrition before investment performance is taken into account,
and it excludes the growth from acquisitions, divestitures, and advisors
joining or leaving a firm with assets.

At Charles Schwab we believe in the power of investing to help
individuals create a better tomorrow. We have a history of challenging
the status quo in our industry, innovating in ways that benefit
investors and the advisors and employers who serve them, and championing
our clients’ goals with passion and integrity. More information is
available at www.aboutschwab.com.
Follow us on Twitter,
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YouTube
and LinkedIn.

Schwab Advisor Services™ serves independent investment advisors and
includes the custody, trading, and support of Schwab.

Independent investment advisors and Schwab are independent of each other
and are not affiliated with, sponsored by, endorsed by, or supervised by
each other. For informational purposes only.

0718-8M3B

1 Data represents median results for firms with $250 million
or more in AUM, unless otherwise noted.

2 Fastest-growing firms are the top 20 percent of firms with
$250 million or more in AUM based on five-year net organic compound
annual growth rate. Net organic growth is the change in assets from
existing clients, new clients, and assets lost to client attrition.

3 Fastest-growing firms are the top 20% of firms with $250
million or more in AUM based on five-year net organic CAGR. All other
firms represent the remaining 80% of firms.